Recent research has revealed that credit unions' tightened lending approach is backfiring, becoming detrimental to both borrowers and lenders. In their attempt to maintain high credit quality, many credit unions (CUs) have missed valuable lending opportunities and lost some of their reputations as lenders focused on serving average, working-class people. Many CUs have reported extremely low delinquencies and charge-off rates, which has sparked concern among lending officers who think they're missing opportunities to fulfill member needs. Thankfully, there are ways to make up for all those lost loans.

A car is one of the most expensive purchases in a consumer's life, which is usually accompanied by a large amount of debt from auto loans. In 2021, auto loans made up nearly 18% of total consumer debt for 18 to 29-year-olds, 10% for 30 to 39-year-olds, and 9% for 40 to 69-year-olds. So, with a vast majority of the population taking out loans for their cars, why isn't your credit union getting more auto loans?

You offer incredible auto loan rates at your credit union, making your institution the perfect spot for members to finance or refinance a vehicle. The competitive rates you offer can certainly help members save money rather than lose it, which is why you should invest in an effective auto loan recapture program. Not only can a recapture strategy benefit your bottom line, but it can also support you in empowering your members to reach their financial goals. However, there are a few options when it comes to achieving success in these areas, including opting to do everything in-house, partnering with a vendor, or paying a vendor to take care of it all. In this article, we'll review how to choose the right approach for your credit union that will benefit you and your valued members.

Credit unions are always looking for more lending opportunities in order to best serve their members, and their credit report and lending history are both key indicators as to areas your credit union could explore. One area that is key to consider is the auto industry.

Credit union loan balances are growing steadily, increasing from 5.3% in 2020. Experts predict loans to escalate 9% each year in 2022 and 2023 after the economy returns to normal, infrastructure expenditure begins, and unemployment levels decrease. As loan balances continue to rise, credit unions are searching for strategies to increase direct lending that will boost profits and set the stage for cross-sales.

Indirect lending has grown substantially over the past several years, especially with the auto lending market. While auto loans grew 18% between 2011 and 2016, other loans grew at just 10%. Today, auto loans comprise 35% of most credit union’s portfolios, however, we’re starting to see a shift where credit unions are backing off of indirect lending programs. It has become clear to the credit union industry that the benefits do not necessarily outweigh the drawbacks. Here are some pros and even more cons of indirect lending: